New £400 and £650 payments unveiled as Chancellor Rishi Sunak U-turns on windfall tax
The Government has U-turned on a windfall tax
By Lizzy Buchan
Joseph Locker
NEWS
Chancellor Rishi Sunak has announced every UK household is to get a £400 discount on their energy bills this autumn. Benefit claimants will also get an additional £650 to help with the cost of living as the chancellor U-turns on a windfall tax on oil and gas firms.
The Conservative chancellor unveiled the new plans amid serious concern millions will be plunged into financial hardship as inflation soars, with the Labour opposition repeatedly calling for a windfall tax on energy giants which have been raking in record profits. Energy regulator Ofgem announced the price cap for bills would rise again to £2,800 by October this year, up from £1,277 the same month a year ago.
New measures from the chancellor come in response to this recent news and are set to be very costly for the treasury, even with the cash raised through the 25% windfall tax on oil and gas firms' profits. Local Labour MPs and councillors across Nottinghamshire, as well as those nationally, had been calling for such a tax for weeks, but the Conservative Government had so far refused.
The Mirror reports Mr Sunak announced the loan of £200 would increase to £400 for all households, and would no longer be repayable, as part of a package to help with the spiralling cost of living crisis. In a statement to MPs on May 26 Mr Sunak also said over eight million households on means-tested benefits will receive a one-off £650 payment, made in two lump sums, with one in July and one in the autumn.
Pensioner households who receive the winter fuel allowance will also get an additional £300 one-off payment and people who receive non-means tested disability payments will get an extra £150. Speaking of energy firms' profits he said he was "sympathetic to the argument to tax those profits fairly" and announced a "temporary targeted energy profits levy" which will be phased out when oil and gas prices return to normal levels.
He describes the windfall tax as a “new investment allowance” to incentivise the reinvestment of profits by fossil fuel giants. Mr Sunak told MPs: "This government will never sit idly by whilst there is a risk that some people in our country might be set so far back they might never recover.
"This is simply unacceptable. And we will never allow it to happen."
Households will receive a £400 discount on their energy bills from October said Chancellor Rishi Sunak
By: Pramod Thomas
26 May, 2022
MOST vulnerable households in UK will receive at least £1,200 this year, including a new one-off £650 cost of living payment, as part of targeted government support to help with the rising cost of living crisis, it was announced on Thursday (26).
British chancellor Rishi Sunak also announced a 25 per cent windfall tax on oil and gas producers’ profits, alongside a £15 billion package for households struggling to meet soaring energy bills.
According to the statement, more than 8 million low-income households will get the benefit of the new funding including the £150 council tax rebate that many families received last month. Besides, separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits were also announced.
Sunak also announced that households will receive a £400 discount on their energy bills from October as the discount will be doubled from £200 to £400.
The chancellor also announced a £500 million increase for the Household Support Fund, delivered by Local Authorities, extending it from October until March 2023.
“We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills. We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today,” Sunak said.
“It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”
The statement added that the windfall tax is expected to raise around £5bn in its first 12 months. This temporary tax will be phased out once gas prices return to normal levels. The levy does not apply to the electricity generation sector, the government said.
The new investment allowance incentivises companies to invest through saving them 91p for every £1 they invest.
The government expects the combination of the Levy and the new investment allowance to lead to an overall increase in investment, and the Office for Budget Responsibility (OBR) will take account of this policy in their next forecast, the statement added.
The government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.
Sunak also set out the government’s strategy to control inflation through independent monetary policy, fiscal responsibility, and supply side activism.
Rishi Sunak says wealthy who could get up to £1,200 in energy payments ‘can give it to charity’
The Chancellor defended the Treasury’s plan to ease the cost of living crisis, which would see rich households benefit from a £400 discount from their energy bills
Chancellor Rishi Sunak has said rich households that receive a £400 energy bill discount from the Government can give the money to charity.
Mr Sunak and his wife have a combined wealth of around £730 million, but are among those who would be eligible for the funds to help with soaring energy bills.
Following yesterday’s announcement of the Treasury’s £15bn package to ease the cost of living crisis, around 772,000 second-home owners are in line for an £800 discount on their energy bills, with wealthy people who have three properties set to receive £1,200.
In the Commons yesterday, Mr Sunak announced that a £200 rebate being applied to every household’s energy bill this autumn would be doubled to £400, and there would no longer be any obligation to pay it back in future.
Mr Sunak, who himself owns three homes, told Sky News he had “wanted to make sure that this was as universal as possible” while “costing the plan”, adding that he will be giving any money he received through the Government’s cost of living schemes to charity.
The Chancellor said: “There are lots of cases of people who will say, ‘Hang on, I happen to live in this, you know, expensive looking house or at a high council tax ban house, but I need help too’.
“So actually, this being universal means that we avoid all of those problems and really do get help to everyone who needs it and you like me, I’m sure, like me, you can also give that money to charity if you don’t need that which which is great.”
He insisted the package was aimed at helping people on middle incomes who were struggling with huge energy bills.
“If there’s another way to help those people whilst figuring out the small minority of very wealthy people who don’t need it I would be very open to it,” he said.
“But actually we are trying to deliver support in my job practically to tens of millions of people, you got to just figure out how best to do that.”
Other measures unveiled by the Government to help ease the cost-of-living crisis included a one-off £650 payment to any household where someone is paid means-tested benefits.
All households with a pensioner will receive £300, and £150 will be paid to any individual who is on disability benefit.
Mr Sunak was adamant that the Government’s package would only have a “minimal” impact on inflation which would amount to “much less” than one per cent.
Inflation hit a 40-year high of nine per cent last week, and is predicted to climb even higher.
But Mr Sunak said pensions and benefits would rise “well in excess” of what inflation is predicted to be next year.
He also hinted that electricity generators could also be included in a windfall tax after placing a 25 per cent levy on oil and gas companies’ profits.
Mr Sunak said there were “extraordinary profits” being made by power giants and said the Government had “plans in place to reform that market”.
He also claimed that Boris Johnson had made “significant changes” to how Downing Street runs in the light of the Partygate scandal.
“These matters have all been now fully looked at by both Sue Gray independently and also by the police,” Mr Sunak said.
“They reached all their conclusions. The Prime Minister’s apologised and made a statement and importantly now made changes in how Downing Street runs.
“I do think that’s the right approach and he has my full support and carrying on now and delivering for the British people.”
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